The Truth about Banks
If you’re angry with banks for their ‘excessive’
fees, huge profits, branch closures, foreclosures and staff cuts, then
wait until you learn the truth about the banking system...
That truth is that if the
government of Australia was truly representing the people of Australia,
the profit-hungry private banks would be kicked out of Australia, replaced
by a peoples bank similar to the early years of the Commonwealth Bank of
Australia (prior to it’s ‘takeover’ by financial interests in 1924).
This would also enable a large decrease in the amount of taxation charged
on the Australian people; eliminate the foreign debt; provide necessary
funding for schools, hospitals, roads and other infra-structure; ensure
the economic growth of Australia and would be the first step towards full
Too good to be true? There is much documented evidence, but space
obviously limits the information that can printed here.
www.banks.web-page.net for a collection
of articles showing alternative systems and the truth behind the current
system of banking.
The Australian Constitution (s51) grants the power of money creation
(currency, coinage, and legal tender) to the Federal Government. The
information contained here will show you that it is banks which actually
create all the money in circulation when they create a loan. Banks are
lending you something that doesn’t exist, and charging you interest.
By law the practice should be stopped it is counterfeiting. The
bank note was legislated because the Government thought they understood
it. The reason why the Government did not legislate regarding the bank
deposits (credit) is because they had no clear understanding about it at
WHAT DOES IT MEAN TO YOU?
If things were done correctly and in the
best interests of the total population, then interest on loans would not
exist (your $100,000 home loan would cost you $100,000 with a 2% ($2000)
book-keeping fee, a total of $102,000). By “creating” money for public
spending, the Government would not need to impose taxation to build
hospitals, roads or schools, as this type of infrastructure is an asset to
the nation, educating our children and keeping people fit and healthy in
order that they may contribute to society. Well maintained roads and
public transport systems allow for the safe movement of people and
transport of goods and services - essential for a healthy economy.
Any taxation (including the paperwork) would be minimal. (Read up on the
Debit Tax at www.debittax.gil.com.au and the Tobin Tax at
www.tobintax.org.uk) There would be no need for foreign investment -
businesses would remain Australian owned, with the jobs and the profits
remaining in Australia. Small business would again be the backbone of
Australia and inflation would disappear. Charities would not be seeking
(via fundraising) funds needed to provide basic services. Money would
flow throughout society and be of benefit to all.
Nothing that any Government (Liberal or Labor) does will save
Australia from it’s sell out to foreign interests, increasing foreign
debt, deteriorating education levels and increasing unemployment unless
they rectify the situation that this article is about.
What can you do about it? Read this article and research the facts
about banks and the history of money. Talk about it with people you know,
and make sure you speak to your prospective member of Parliament.
There is a very easy solution that has massive benefits to all, which is
known by several terms, including Social or Public Credit.
Please read on for the proof of the above.
A BRIEF HISTORY OF MONEY
(edited from “…and the
truth shall set you free”)
The Christian world had a strict ban on
usury (the charging of interest on loans) which was punishable by death,
but as the centuries passed this was forgotten, and the banking system
which today controls humanity began to develop.
The currency of that time was precious metals (such as gold and silver)
and, for safety reasons, the owners began to deposit their wealth with the
goldsmiths, who had suitable strong rooms to ensure its safekeeping. The
goldsmiths would issue paper receipts for the gold and silver deposited
with them, and the owners would pay their debts by withdrawing portions of
their ‘deposits’, as necessary. It was obviously an unwieldy process to
move all those metals around and the paper receipts slowly became accepted
as currency. The gold and silver were rarely moved, but the
ownership of it changed with the issuing of receipts (‘money’) to
pay off debts. In the same way today, vast fortunes are made by simply
moving numbers between one computer file and another.
The goldsmiths and other owners of the strong rooms began to realise that,
at any one time, only a fraction of the gold and silver was being
withdrawn by the owners. “So,” they thought, “why don’t we issue notes
(money) to other people who don’t own the gold and charge them interest on
the notes?” The only way the ruse could fail was if they issued too many
notes and everyone came along at the same time to cash them in for gold
and silver. They began to issue notes for the ownership of the gold and
silver greatly in excess of the amount of gold and silver they had
deposited in their vaults. Most of the notes they lent (and earned
interest on) were related to gold and silver which the ‘banks’ did not
even have. But since only a small amount of the metals was being withdrawn
at any one time, they were in the clear. They could issue lots of bits of
paper for gold and silver that didn’t exist and charge interest for doing
so! There, in one sentence, you have a description of today’s banking
system, which controls the world.
THE MONEY TRICK
Most of us have grown up with only the
vaguest notions of money.
Banks go to great pains to perpetuate the fiction that they are merely
“the custodians of their customers’ deposits” that they lend these
deposits and that their profit consists of the difference in the rate of
interest which they pay to depositors and the interest they receive from
Such an idea is quite wrong, and it is the popular acceptance of this
major monetary fallacy which gives rise to most of the false notions upon
the subject of money.
The facts about money are as follows:
1. Banks do not lend money deposited with them. ‘Fixed deposits’
are a plausible screen to hide the creation of credit.
2. Every bank loan or overdraft is a creation of entirely new money
(Credit) and is a clear addition to the amount of money in the community.
3. No depositor’s money is used when a bank lends money.
4. All money in the community begins its life as an interestbearing debt
to the banks.
If I loaned you $1,000, you would have $1,000 more than you previously
had, and I would have $1,000 less. However, the money in circulation
would be the same - no more and no less. Logistically, this should mean
that the accounts of depositors are debited in order to fulfill the
credits, leaving them with less than before - but this does not happen.
Have you ever noticed a missing amount on your bank statement and then
rung the bank manager, only to be told “I lent it to someone.”?
THE TECHNIQUE OF A BANK LOAN
All that a bank does in lending anybody,
say, $1,000, is to open an account in the borrower’s name if he hasn’t
already got an account and write Limit: $1,000, across the top of the
ledger. The borrower is now free to operate and overdraw on this account
to the limit indicated.
When the account is drawn on by cheque, and in turn the cheque is lodged
in another account at the same or another bank, a ‘deposit’ is thus
created and the supply of money increased.
Thus bank loans create ‘deposits’, which plainly are not the source of
loan money but, rather, the other way round, they are the outcome of
When the loan is repaid, the principal amount is then ‘extinguished’
removed from circulation. The interest is never extinguished.
Inflation is caused by interest charged on money loaned.
NOW FOR THE AUTHORITIES
Now for the unassailable authorities on
this matter of the creation of credit by the banks.
Governor Eccles, onetime head of the Federal Reserve Bank Board of the
United States, said: “The banks can create and destroy money. Bank credit
is money. It’s the money we do most of our business with, not with that
currency which we usually think of as money. (Given in evidence before a
The Encyclopaedia Britannica, 14th Edition, under the heading of Banking
and Credit (Vol. 3, page 48): “Banks create credit. It is a mistake to
suppose that bank credit is created to any important extent by the payment
of money into the banks. The bank’s debt is a means of payment, it is
credit money. It is a clear addition to the amount of the means of payment
in the community.”
Mr. R. G. Hawtrey, previously Assistant UnderSecretary to the British
Treasury, in his ‘Trade Depression and the Way Out’, says: “When a bank
lends it creates money out of nothing.”
In his book, ‘The Art of Central Banking’, Hawtrey also wrote: “When a
bank lends, it creates credit. Against the advance which it enters amongst
its assets, there is a deposit entered in its liabilities. But other
lenders have not this mystical power of creating the means of payment out
of nothing. What they lend must be money that they have acquired through
their economic activities.”
THERE IS ONLY ONE RESTRAINT ON LENDING
The July, 1938, issue of ‘Branch
Banking’, an English Bankers’ Journal, stated: “There is no more
unprofitable subject under the sun than to argue any banking or credit
points, since there are enough substantial quotations in existence to
prove to the initiated that banks do create credit without restraint.”
“BANKING IS LITTLE MORE THAN BOOKKEEPING”
The late Sir Edward Holden, an eminent
British banker, said: “Banking is little more than bookkeeping. It is a
transfer of credit from one person to another. The transfer is by cheque.
Cheques are currency (not legal tender). Currency is money.”
The Rt. Hon. Reginald McKenna, onetime Chancellor of the Exchequer, and
Chairman of the Midland Bank, said (recorded in his book ‘PostWar
Banking’): “I am afraid the ordinary citizen will not like to be told that
the banks can, and do, create and destroy money. The amount of money in
existence varies only with the action of the banks in increasing or
decreasing deposits and bank purchases.”
Professor Heinz Wolfgang Arndt, Professor of Economics at the National
University, Canberra, writing on Banking in ‘The New International
Illustrated Encyclopaedia’, (Vol. 1, page 321) said: “ . . . The other
important function which is exclusive to the banking system, is to create
the community’s money supply, and to administer the monetary system. The
two functions are intimately connected since modern money is created by
banks in the process of granting credit.” (Note: To create means to
produce out of nothing.)
H. W. Arndt and C. P. Harris, in their textbook ‘The Australian Trading
Banks’, clarify this further in a special appendix, The Creation of
Money’: “The process of creation of money by banks is still commonly
described as involving the ‘deposit of money by customers with banks’
which can then lend out more money they have’ because some of the money
they have lent out ‘comes back to them as deposits’. ... Nowadays it is a
mischievously misleading description. It is misleading because it wrongly
(a) that notes and coin are, but deposits are not, money;
(b) that banks merely borrow and lend money created by someone else; and
(c) that deposits come into existence primarily through bank customers
paying in notes and coin, and only secondarily through bank lending. ...”
The former Governor of the Reserve Bank, Dr. H. C. Coombs, in the E. S. &
A. Research Address at Queensland University on September 15, 1954 made
the same clarification:
“… Any given piece of expenditure can be financed from one of four sources
(or a combination of these sources)
(a) new savings;
(b) accumulated reserves;
(c) money borrowed, other than a bank;
(d) money borrowed from a bank.
“The last source differs from the first three because when money is
lent by a bank it passes into the hands of the person who borrows it
without anybody having less. Whenever a bank lends money there is,
therefore, an increase in the total amount of money available. ...”
BANK OF N.S.W.: Finally, the matter has been put beyond all
possible doubt by a most important Special Article ‘Sources of Money’ in
the ‘Bank of New South Wales Review’, October 1978, from which we quote
extracts: “... Today in Australia, as in most other modem economics, all
money is a debt of the banking system. … Another important source of money
creation is by banks.
“... When a banker grants a customer credit by overdraft, the bank ‘opens
an account’ in its books and gives the client the right to draw funds
without first having to put money into the account. But bank deposits only
increase when the customer actually draws on the account to pay his
creditors. In the case of loans, funds are deposited directly to the
customer’s credit and results in an immediate increase in the volume of
“In either case the money supply increases as a result of the bank’s
lending activities. As long as the debt remains outstanding the
community’s quantity of money is increased. ...”
R.H. Tawney, in ‘Religion and the Rise of Capitalism’, wrote “To take
usury is contrary to Scripture; it is contrary to Aristotle; it is
contrary to nature, for it is to live without labour; it is to sell time,
which belongs to God, for the advantage of wicked men; it is to rob those
who use the money lent, and to whom, since they make it profitable, the
profits should belong; it is unjust in itself, for the benefit of the loan
to the borrower cannot exceed the value of the principal sum lent him; it
is in defiance of sound juristic principles, for when a loan of money is
made, the property in the thing lent passes to the borrower, and why
should the creditor demand payment from a man who is merely using what is
now his own?”
FURTHER SUPPORTING QUOTES
“If the American people ever allow
private banks to control the issue of their currency, first by inflation,
then by deflation, the banks...will deprive the people of all property
until their children wake-up homeless on the continent their fathers
conquered. ... The issuing power should be taken from the banks and
restored to the people, to whom it properly belongs.”
-Thomas Jefferson, 3rd US President.
“Whatever the Australian people can intelligently conceive in their
minds and will loyally support, that can be done.”
- Sir Denison Miller, Governor of the Commonwealth Bank, 7th
“Whoever controls the volume of money in any country is absolute
master of all industry and commerce.”
- James A. Garfield, 20th
“In 1911 the Commonwealth Bank was established, not as a central
bank to manage credit for the benefit of the community, but to compete
with the private profit-making banks ‘whose gradual extinction … would
follow as a matter of course’.”
- A.G.L. Shaw, senior lecturer in History, University of Sydney. The
Economic Development of Australia (Longmans 1944)
“History records that the money changers have used every form of
abuse, intrigue, deceit, and violent means possible to maintain their
control over governments by controlling money and its issuance.”
-James Madison, 4th
“Banking establishments are more dangerous than standing armies.”
- Thomas Jefferson, (Letter to Elbridge Gerry, Jan. 26, 1779)
“The Government should create, issue, and circulate all the currency
and credits needed to satisfy the spending power of the Government and the
buying power of consumers. By the adoption of these principles, the
taxpayers will be saved immense sums of interest. Money will cease to be
master and become the servant of humanity.”
-Abraham Lincoln, 16th
Despite these warnings, U.S. President Woodrow Wilson signed the 1913
U.S. Federal Reserve Act. A few years later he wrote: “I am a most
unhappy man. I have unwittingly ruined my country. A great industrial
nation is controlled by its system of credit. Our system of credit is
concentrated. The growth of the nation, therefore, and all our activities
are in the hands of a few men. We have come to be one of the worst ruled,
one of the most completely controlled and dominated Governments in the
civilized world, no longer a Government by free opinion, no longer a
Government by conviction and the vote of the majority, but a Government by
the opinion and duress of a small group of dominant men.”
-Woodrow Wilson, 28th
“Banking was conceived in iniquity and was born in sin. The Bankers
own the earth. Take it away from them, but leave them the power to create
deposits, and with the flick of the pen they create enough deposits to buy
it back again. However, take it away from them, and all the great
fortunes like mine will disappear, and they ought to disappear, for this
would be a happier and better world to live in. But, if you wish to
remain the slaves of the Bankers and pay the cost of your own slavery, let
them continue to create deposits.”
- Sir Josiah Stamp
(President of the Bank of England in the 1920’s, and then the second
richest man in Britain)
“People who will not turn a shovel full of dirt on project (Muscle
Shoals Dam) nor contribute a pound of material, will collect more money
from the United States than will the People who supply all the material
and do all the work. This is the terrible thing about interest...But
here is the point: If the Nation can issue a dollar bond it can issue a
dollar bill. The element that makes the bond good makes the bill good
“The difference between the bond and the bill is that the bond lets the
money broker collect twice the amount of the bond an additional 20%.
Whereas the currency, the honest sort provided by the Constitution, pays
nobody but those who contribute in some useful way.
“It is absurd to say our Country can issue bonds and cannot issue
currency. Both are promises to pay, but one fattens the usurer and the
other helps the People. If the currency issued by the People were no
good, then the bonds would be no good, either. It is a terrible situation
when the Government, to insure the National Wealth, must go in debt and
submit to ruinous interest charges at the hands of men who control the
fictitious value of gold. Interest is the invention of Satan.”
- Thomas A. Edison
“This is a staggering thought. We are completely dependent on the
commercial Banks. Someone has to borrow every dollar we have in
circulation, cash or credit. If the Banks create ample synthetic money,
we are prosperous; if not, we starve. We are absolutely without a
permanent money system. When one gets a complete grasp of the picture,
the tragic absurdity of our hopeless position is almost incredible, but
there it is. It is the most important subject intelligent persons can
investigate and reflect upon. It is so important that our present
civilization may collapse unless it becomes widely understood and the
defects remedied very soon.”
- Robert H. Hemphill, (Credit Manager of Federal Reserve Bank, Atlanta,
That should leave you with no doubt as to the introductory claims that
I made. If you’ve ever wondered why things aren’t any better than they
are economically, you now have your answer.
It is only with the Australian people in complete control of the
Australian economy, that ‘things’ will ever get better for every
It is absolutely essential that we end:
• credit creation and the charging of interest on loans by private banks;
• the exploitation of Australia by foreign influenced, for-profit
• the manipulations of currency
• the influence of the International Monetary Fund/World Bank (run by
non-elected bankers, appointed by financiers with the aim of serving their
Money is a means of exchange,
and not wealth in itself.
A society cannot grow and develop unless
money is flowing through that society, changing hands and going where it
is needed - not piling up in the pockets of a few.
Do yourself, your children and Australia a favour at the next Federal
election. Ask the candidate you intend to vote for what they will do
about the above information.
Once again, there are alternatives, which have been proven to work in the
island of Guernsey in 1820’s and currently being demonstrated with the
“Ithaca Hours” program in Ithaca, New York state, U.S.A. (www.lightlink.com/ithacahours).
Once again, for more information on the current banking system and some of
the alternatives, please refer to my website at
for the following essential readings:
• The story of the Commonwealth Bank, D.J. Amos
• Billions for the Bankers and Debts for the People, Sheldon Emry.
• The Love of Money, Barney McCoy.
• The Evil of Usury, Jason Jeffery.
• The Money Myth Exploded, Louis Even
or refer to the following books:
• “…and the Truth shall set you Free”, David Icke, Bridge of Love
Publications, 1998. ISBN 0952614715
• Hand over our loot! 2, Len Clampett, (self-published, no longer in
print.) ISBN 0 7316 9601 8.
Sources: the above mentioned books and: The Money Trick, author
unknown, an Institute of Economic Democracy publication.
What will I do?
I will fight for the introduction of a new Commonwealth
Government bank, run for the benefit of the Australian people,
providing the following:
• a vast reduction in taxation;
• interest free loans;
• debt-free funding for financing of health care, education and provision
of infra-structure (roads and public services) and other services;
• elimination of foreign debt;
• support for the redevelopment of Australian owned industry and business;
• WEALTH AND PROSPERITY FOR ALL.
Written and Authorised by Robert O’Brien, Independent Candidate for
Halliwells Road, Allansford, 3277